If you haven’t heard specifically about a gateway account, you can think of it as a credit card terminal, but instead of a physical machine, it’s a program that resides on a webserver. The gateway basically gets the transaction information from your customer to the merchant account bank for processing. It handles the sending and receiving of the financial information including the credit card information and billing information and the subsequent receipt of the approval or denial codes that the bank sends back based on the credit card information.
Most internet merchant accounts have the ability to process a transaction through a virtual terminal. This is done by logging into the gateway website (such as Authorize.Net) and accessing the page that provides this virtual terminal. The merchant or an authorized employee can then input the credit card number, billing information and the amount to be charged and get a real-time authorization that the funds are available. Assuming the product or service is delivered at that time or prior to, the funds can then be “captured” as well. This virtual terminal is a convenient way to process a direct order assuming the transaction information comes over the phone and will provide the merchant an immediate way to capture the sale instead of requiring the customer to go back to the website to input some information and try a checkout process again.
The fees associated with the gateway account are usually based on three components, the setup, the monthly fee, and a per transaction fee. Expect to pay around $25 to $150 for the setup, $5 to $15 for the monthly and anywhere from $.00 to $.10 per transaction for the gateway service. Keep in mind that these fees are usually above and beyond what the merchant account provider will charge you for the merchant account processing fees. Depending on who you use for your merchant account provider, you can usually get a very competitive rate and pricing that includes bundled fees to where your total monthly fee is less than $25 (which is about what the Paypal professional account costs). With this “real” merchant account, you’ll usually be lower on your processing fees as well.
There are several payment platforms in the US including First Data, Paymentech, Global / Vital, and several others. That I know of, First Data represents over 50% of the nation’s processing. Either way, most merchant account providers today are setup on several different platforms or at least have the ability to select a specific platform or what’s called a “file build”. The main thing you need to do here is simply let your merchant account provider know what gateway company you plan on using and make sure to ask them if it’s compatible. Chances are it is. There are some merchant account providers who also offer a 30 or even 45 day “trial” period on the merchant account so if it doesn’t work, you aren’t tied into a long term contract. Ask your merchant account provider for details about that topic.
Another benefit to the gateway account is that some have the option of getting setup with a retail swipe with a USB attachment. This is great if you have your account priced as a retail account and will be using it for at least 30-40% of your transactions in person (whether a retail setup, storefront, or a trade show, etc). What this allows you to do is swipe the transactions and get a lower rate for those because they are considered less risk as the card is physically present at the time of the transaction. This isn’t used too often, but may be a source of saving a significant amount of money if you choose to use it.
There are some instances when you can get the “spec” for the payment platform and if you or your programming team is skilled enough with the programming, you can send transactions directly to the payment platform for processing instead of going through the gateway. This has some advantages and also some disadvantages. The advantage is that if you bypass the gateway, you’ll be saving the money you would normally have spent on each transaction that was processed through the gateway. The disadvantage is that you don’t have the same access to support and if there is something wrong with your code or instances where you have transaction information “stolen” over the wire, your company is held liable for those lost transactions that can be as much as $10,000 per instance. If you lose 100 transactions, that’s a cool $1,000,000. Although this is extreme, it’s out of your hands if you’re using a provider that is Verified by Visa or using the Mastercard program.
In conclusion, the gateway account for most merchants is a valuable component to any ecommerce or online payment processing situation. This is typically very easy to setup and most merchant account service providers can set this up for you at the same time as your merchant account is setup. And, some can even do this for less expensive than if you were to contact your gateway provider directly. This is based on volume discounts that some of the larger providers can get with the gateway companies. This is pretty easy to get setup.
Brian Armstrong has been setting up merchant accounts for over 7 years for businesses. If you would like to find out more information about ecommerce merchant accounts, you can visit Brian’s Youtube channel by clicking here.
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